2014 Mutual Review of Development Effectiveness Development Africa in of Review Mutual 2014 THE MUTUAL REVIEW of Development Effectiveness in Africa: The ECA-OECD 2014 Mutual Review of Development Effectiveness in Africa: Promise & Performance Promise & Performance is intended to provide a focused and accessible set of answers to four questions: 2014 • What are the main commitments which have been made by Africa and its development partners? • Have these been delivered? • What have the results been? • What are now the key future policy priorities? The report can be found at: Economic Commission for Africa A joint report by: www.uneca.org ECA-OECD the Economic Commission for Africa and Organisation for Economic Co-operation and Development the Organisation for Economic Co-operation and Development www.oecd.org If you require more information about the MRDE reports, please contact: Derrese Degefa ([email protected]) or Lynn Kirk ([email protected]) THE MUTUAL REVIEW of Development Effectiveness in Africa: Promise & Performance The 2014 Mutual Review of Development Effectiveness in Africa: Promise and Performance has been jointly prepared by the Economic Commission for Africa (ECA) and the Organisation for Economic Co-operation and Development (OECD) 2014 MRDE 2014 • 1 Preface Africa has changed. The continent is reaping the benefits political and economic governance, and increase domestic of better macroeconomic management and deepening in- resource mobilisation. Domestic revenue overwhelmingly pro- tegration into the world economy. In contrast to the weak vides the main source of finance for Africa’s development ef- and uneven growth in many advanced economies, 4 of the forts. Closer regional integration is supporting this process. 10 fastest growing economies in the world in 2013 were in Access to primary education and health services has been Africa. Domestic revenues and investment continue to grow. improved but Africa continues to suffer under significant gen- More people are being lifted out of poverty, and more chil- der and regional disparities. The region has the highest rate of dren are in school. Stronger institutions and democracies in maternal and under-five mortality. Much remains to be done to many parts of the continent have created much optimism, ensure the quality and sustainability of growth, boost employ- high expectations and huge potential. Nevertheless, major ment, tackle infrastructure constraints, galvanise the potential challenges remain. Africa has made significant progress to- of women and offer the youth better prospects, and accel- wards the Millennium Development Goals (MDGs) but this erate progress on the most ‘hard-to-reach’ MDGs, including progress continues to be uneven and too slow. Poverty re- improving access to clean water and sanitation and reducing mains a key challenge, widespread unemployment, espe- maternal and child mortality. cially among youth, contribute to persistent inequality, and climate change poses a growing threat to long-term devel- Whilst the development process in Africa is being led by Af- opment. rican governments, stakeholders and citizens, it is also linked to what happens in the wider global economy and to effec- In order to maintain the progress achieved to date and to meet tive international support. Development partners have made longer-term challenges, it is important for both African govern- an important contribution, including through substantial Of- ments and their international partners to meet their develop- ficial Development Assistance (ODA), even though earlier com- ment commitments, and for the results to be assessed. That mitments have still not been met in full. It is encouraging that is the purpose of this seventh joint “Mutual Review of Develop- aid to developing countries rebounded in 2013, despite fis- ment Effectiveness in Africa” by the Economic Commission for cal pressures, to reach an all-time high but it is worrying that, Africa (ECA) and the Organisation for Economic Co-operation despite this global increase, aid to Africa actually fell. As the and Development (OECD). Like previous reports, it covers 4 world focuses increasingly on the post-2015 sustainable de- broad policy areas: sustainable economic growth, investment velopment goals, it is vital that the trend in aid away from the in people, good governance and financing for development. poorest countries be reversed. Aid will remain an essential pil- Within these 4 areas, it looks at 19 individual topics. In addi- lar to achieving the post-2015 goals. tion to reviewing the delivery of commitments and the results achieved, it also considers future policy priorities. The successful meeting of the Global Partnership for Effective Development Cooperation in Mexico in April 2014, the vibrant The report is a unique collaborative exercise in mutual ac- debate on the shape of the post-2015 goals, and the increased countability, undertaken under a mandate from NEPAD efforts being made to tackle illicit financial flows and the ero- Heads of State and Government. It aims to provide a practi- sion of tax bases through profit-shifting including in the G8/ cal tool for political leaders and policy makers. It looks at G20 and by Africa itself, are also important steps forward. At Africa as a whole, while recognising the remarkable degree the ECA, this approach has been strengthened by a sharper of diversity across the continent. focus on inclusive growth and the economic transformation of the continent. At the OECD, it has been strengthened with an Over this past decade, there has been real progress on the part OECD Strategy on Development focused on knowledge shar- of African governments in delivering commitments to improve ing, growth enhancing policies and policy coherence. 2 • MRDE 2014 In June 2014, the African Union (AU) Assembly of Heads of State and Government endorsed the establishment of the Africa Global Partnership Platform to replace the Africa Partnership Forum. The new dialogue structure will reflect the evolving global political and economic landscape, including the leading role being played by the G20 and emerging economies, by being an all-inclusive platform for coordinating Africa’s expanding international partnerships. Against this background, the report identifies the following priorities for Africa and its development partners. Africa: • To deepen Africa’s structural transformation through industrialisation to achieve the long-term development goals of the region; • To maintain the momentum of political and economic reform, and their collective efforts to bring greater peace and security to the continent; • To deepen the process of regional integration, including in the key areas of trade and infrastructure; • To increasingly rely on and enhance domestic resource mobilisation, including through stemming illicit financial flows, and capitalise on the opportunities for attracting increased domestic and foreign investment; and • To focus these resources in support of both the MDGs and the successor post-2015 sustainable development goals as well as Africa’s own Agenda 2063 Vision and Priorities. Development partners: • To deepen cooperation in the areas of structural transformation of African economies and its economic governance such as preventing the erosion of tax bases and tackling illicit capital flows in support of Africa’s efforts to increase domestic revenue; • To continue to resist protectionist pressures, and re-double efforts to make the best use of regional and multilateral trade agreements for development; • To resist pressure on aid levels and reverse the decline in aid to Africa; and • To facilitate Africa’s enhanced participation in arrangements for global governance. The international community: • To seize the opportunity of the new Global Partnership for Effective Development Cooperation to help accelerate progress towards the MDGs; and • To work together to build a development agenda beyond 2015 which will promote global prosperity, reduce poverty and advance social equity and environmental sustainability. MRDE 2014 • 3 THE MUTUAL REVIEW of Development Effectiveness in Africa: Promise & Performance A joint report by the Economic Commission for Africa and the Organisation for Economic Co-operation and Development E xecutive Summary 6 Contents PART I: TOPICS n I : SUSTA NABLE ECONOMIC GROWTH 1. Industry 10 2. Trade and diversification 12 . 3 Agriculture 14 4. Infrastructure 16 5. The private sector 18 6. Environmental sustainability 20 7. Climate change 22 n II ET: INV S ING IN PEOPLE 8. Education 24 9. Health 26 10. Food security 28 11. Promoting gender equality and women’s empowerment 30 n III : GOOD GOVERNANCE 12. Political governance 32 13. Economic governance 34 14. Peace and security 36 4 • MRDE 2014 n IV : FINANCING FOR DEVELOPMENT n BOXES 15. Domestic public resources for development 38 Box 1. The Common African Position on the Post-2015 16. Foreign direct investment and other private Development Agenda 57 financial flows 40 Box 2. Structural transformation through 17. Development assistance 42 industrialisation 58 18. External debt 44 Box 3. Tackling the challenges of youth unemployment 19. Climate finance 46 and underemployment in Africa 59 Box 4. G20 development outlook 60 PART II: APPENDICES Box 5. Illicit financial flows 61 n CHArts And FIGURES n REFERENCES 62 Real GDP growth rates 50 n A CRONYMS & TERMS 68 Contribution to overall growth by sub-region (%) 50 n AcO KN WLEdgEMEnts 71 Nominal GDP by sub-region (US$ billion) 50 Shares of the 5 sub-regions